Experiences with Organic Agriculture

1. Experiences with Organic Agriculture Dr. Sophia Twarog, UNCTAD Standards and Trade Workshop 16 May 2002

2. Opportunities • Demand growing 10-20% in most major markets • US$ 17.5 billion market in 2000 • Economic,social, health and environmental benefits for DCS • Possible DC comparative advantage • Over 100 DCs produce certified organic products

3. Production Constraints • Limited governmental support • Lack of technical know-how • Lack of organic inputs • Little R&D on plant varieties and prod’n methods best suited to DCs • Conversion period- smallholders have limited financial reserves

4. Export Constraints • High certification costs • Lack of market information and marketing strategies • Limited physical transport and storage infrastructure • Complex import procedures • Tariff and non-tariff protection

5. Certification • Most DC exporters depend on certification by international certification bodies • National certification infrastructure limited in most DCs • Unaffordable for smallholders • Smallholder group certification SGC not recognized in importing C reg’s

6. Standards and import regulations • Multitude of private standards and government regulations • No well-functioning mechanisms for mutual recognition • Multiple certification/accreditation is costly • Obtaining import permits-cumbersome and time consuming

7. Market information and channels • Limited market information available at producer level • Sometimes DC certified organic products get sold as conventional

8. Other market risks • Organic market is fairly small (LT 2% of total food market in most dev’d C’s) • Dev’d C efforts to promote OA production, including subsidies • Eastward enlargement of EU could increase OA supply • Increasing consumer preference for locally supplied food

9. EU Regulation 2092/91 • Para 1: “third country list” (6 C’s) • Para 6: “importer derogation” • Importer submits documentation that products are produced and certified according to rules equivalent to EU’s • Permit takes several weeks or months • Over 80% of EU OA imports, from over 85 countries • Due to expire 31 December 2005

10. Other EU Regulations • No. 1788/2001: aims to harmonize import procedures throughout EU • from 1 July 2002 • requires an original certificate of inspection for each consignment • Is expected to increase delays • Since July 1999, certification bodies must conform to EN 45011 or ISO 65

11. USA Regulations • Standards adopted December 2000 • Certifiers operating in foreign countries may apply for USDA accreditation. • In first round (April 2002), 37 foreign certifiers applied, incl. 12 from 10 DCs. • 4 were accepted, including 1 from Peru • The other applications are pending.

12. USA Regulations, cont’d Otherwise, certifiers seek recognition • USDA determines, upon the request of a foreign gov’t, that its authorities are able to assess and accredit certifying agents as meeting the requirements of the National Organic Programme (NOP), • Or as meeting requirements equivalent to the NOP under an equivalency agreement

13. Costa Rica • 1.9% of land under permanent cultivation is under organic production or in conversion • Small producers (94% of certified farms are LT 5 hectares) • Exports to EU and USA • Main exports: coffee & bananas

14. Costa Rica • Institutional support • National Programme for OA (est. 1995) • Dept. on Accreditation and Registration of OA in Ministry of Agriculture, deals with issues related to inspection • National standards • Procedures for accreditation of certifiers; regulations for inspection

15. Costa Rica • Good certification and accreditation infrastructure • 3 authorized inspection agencies (2 national, 1 German) • These have arrangements with import market-based certifiers • Expected to be soon included in the EU “third country list”

16. India • National Programme for Organic Production • National Standards—March 2000 • Tea, Coffee, Spices Boards and APEDA—accreditation agencies for products under their responsibility • Applied for EU “third country list”

17. India • Key role of NGOs and farmer organizations • Commodity-specific boards providing some support to OA • Spices Board meets 50% of certif. Costs • Price premiums—difficult to secure • Ex: organic pepper

18. Uganda • Small scale producers • Exports include cotton, sesame, coffee, fruits • No national standard • No clear government policy or support • No locally-based certification body

19. Recommendations • Raising awareness and promoting policy dialogues • Research and development • Training (farmers, agricultural extension workers) • Development of national legislation and standards (for C’s with larger OA sector)

20. Recommendations, cont’d • Develop domestic markets • Improve access to market information • Develop marketing strategies • Appropriate government support

21. Recommendations, cont’d • Reducing certification costs • Assistance in meeting certification costs • Local certification/inspection body • Inspections done by local staff charging local fees • Provisions for smallholder group certification based on Internal Control Systems (ICS)

22. Recommendations, cont’d • Reduce expensive multiple certification through harmonization and mutual recognition of OA regulations, standards and certification • Among governments • Among accrediting agencies • Among private/public certifying bodies

23. Recommendations, cont’d Facilitating imports of OA products • Regulations reflecting the needs of DCs, e.g. provisions for SGC • Transparent and understandable procedures • Mutual recognition of OA regulations • Providing information (standards, market opportunities, etc.)

24. Recommendations, cont’d Bilateral and multilateral aid agencies can provide/finance technical assistance to: • Promote OA production • Obtain certification • Identify business partners

25. Trade rules issues • Implications of developed country subsidies to OA production • Need for transparent and non-discriminatory labelling • Possibilities to grant special & differential treatment, incl. trade preferences, to OA products fr. DCs

26. Trade rules issues,cont’d • Post-Doha: could the mandated negotiations aimed at reducing or eliminating tariff and non-tariff barriers to environmental goods and services benefit DC exports of OA products?

27. Possible follow-up activities By UNCTAD and UNEP/UNCTAD CBTF, working closely with IFOAM, FAO, ITC and other relevant institutions

28. Possible follow-up activities Assisting DCs in designing and implementing appropriate gov’t support for OA production & export, through • Studies, including identifying promising products, ways to reduce certification costs, overcoming constraints • Policy dialogues, incl. to create awareness of benefits of OA and promoting multi-stakeholder committees

29. Possible follow-up activities Exploring mechanisms for recognition of organic guarantee systems of DCs • Promoting mutual recognition • Examining ways to promote the practical application of the concept of equivalence, including through Task Force involving Governments, IFOAM, FAO, UNCTAD and others.

30. Possible follow-up activities • Promoting transparent and simple rules governing OA imports • Exploring trade preferences for OA products from DCs • Examining market strategies (ITC) incl. disseminating market research to DCs, explore e-commerce opportunities, promoting partnerships w/ buyers, donors